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A fundamental fiscal deception

I’d like to see if I can add a little more clarity to yesterday’s post about the President’s new budget proposals. In particular, I want to try to help you zoom out from specifics (like the war funding gimmick) and see what I think is a larger and more fundamental deception in the fiscal argument being made by Team Obama.

I think of this as a layered argument. These layers are nothing more than a mental model I’m using to keep my own thinking straight about this complex topic. The layers get progressively more egregious.

Layer 1 involves legitimate judgment calls about what to count, what not to count, and how to count it. This includes questions like “Should we count Medicare doc fix spending as part of this proposal,” and “Should we measure tax increases for the rich against current law or current policy?” These are budget judgment calls in which honest, well-intentioned budget wonks can and will reach different conclusions, and everyone else’s eyes will glaze over.

Layer 2 is about pure scoring gimmicks. There are two in the President’s new proposal:

The war drawdown gimmick — the Administration is claiming deficit reduction credit for drawdown decisions in Iraq and Afghanistan that were made long ago.

The past legislative action gimmick — the Administration appears to be claiming deficit reduction for spending cuts enacted over the past six months as if it is new. These spending cuts were contained in the spring’s Continuing Resolution law and the first round of spending cuts in the summer’s Budget Control Act. I say “appears to be claiming” rather than “is claiming” because they are very cleverly wording their claims. I get to this in layer 4.

Layer 3 expresses the effects of that dishonest budgeting in two ways: (a) the Administration’s claimed $4T of deficit reduction, and (b) their claim of balance between spending cuts and tax increases. No matter what your view on the items in layer 1, the Administration can only make these two very specific claims because of the gimmicks in layer two. These two claims are central to the President’s fiscal policy argument.

Layer 4 involves the too-clever word games. When pressed, Administration officials can correctly argue that their carefully-phrased language acknowledges the gimmicks in layer 2. The Administration isn’t technically lying to you — as I showed yesterday, they explicitly acknowledge the “including the $1 T of spending cuts already enacted” point, and while the President’s statements are highly misleading, they are also technically true. It’s just that almost nobody understands the artful phrasing that leads you to an incorrect conclusion that they don’t actually say.

Layer 5 is that the President’s plan and communications strategy appear predicated on this rhetorical misdirection. If you reject the budget gimmicks in layer 2, then the $4T and “balanced deficit reduction” claims are invalid, and the conclusions the Administration misleadingly allows you to draw (but technically doesn’t say) are flawed. I can’t see how this can be anything other than an intentional strategy centered on taking advantage of the reality that (almost) nobody understands all this budget stuff.

Most observers and press are focused on layers 1, 2, and 3(a). Almost everyone understands the war funding gimmick by now, so it comes up repeatedly in discussion. I think the problems go deeper — layers 4 and 5 bug me even more. Budget scoring is an arcane subject, and there are always judgment calls to be made. I have yet to see a budget (from either party) that doesn’t contain at least a few questionable scoring calls and gimmicks, most of which are secondary to the real hard policy choices made in the rest of the budget. In this case, however, the President’s argument rests on scoring gimmicks that are indisputably dishonest. And there’s no way that can be an accident.

It appears Team Obama wants you to conclude that there is no difference between the President and Congressional Republicans on the amount of proposed deficit reduction, and that the President wants a prospective deficit reduction approach balanced between spending cuts and tax increases. Both conclusions are false. The policy changes the President is proposing are significantly less deficit reduction than that proposed by (House) Republicans, and almost all of the President’s new proposed deficit reduction comes from tax increases.

To put the second point in schoolyard terms, President Obama is in effect saying to Republicans, “We did it all your way (spending cuts) the last two times, so this time we should do it almost all my way (tax increases). That’s balanced.”

It’s a legitimate liberal policy position to propose new net deficit reduction of about $1.4 T over the next ten years, almost all of which comes from tax increases on the rich. That is the President’s policy. I think it’s terrible policy, but that’s a judgment for the Congress and ultimately for American voters to make.

Team Obama knows they will lose the public debate if they actually say that, so they are helping you to draw mistaken conclusions about what they are actually proposing. They are instead pretending to propose $4T of deficit reduction over the next ten years, balanced between “real, serious spending cuts” and tax increases.

That is a fundamentally dishonest presentation of the policies the President is actually proposing.